US Inflation Spikes 3.2%, Consumer Prices Up 0.4% in April 2011

US inflation raced at its fastest annual pace in two and a half years as the cost of energy and food drove consumer prices higher, according to the latest Consumer Prices Index (CPI) report published by the government on Friday, May 13.

Americans are paying more for goods and services for a tenth straight month as consumer prices increased 3.2 percent in the 12 months ending April 2011, the highest figure since October 2008. The annual rate was 1.1 percent as recently as November. The gain was greatly attributed to rising gasoline prices.

"The energy index posted another increase in April as the gasoline index continued to rise, the latter accounting for almost half of the seasonally adjusted all items increase," the US Labor Department said Friday in its monthly CPI report. "The energy index has now risen 19.0 percent over the last 12 months, with the gasoline index up 33.1 percent. The food index has risen 3.2 percent while the index for all items less food and energy has increased 1.3 percent; both figures represent increases over recent months."

When pulling out the more volatile food and energy prices, the so-called core inflation rate rose 1.3 percent over the past year, which was the biggest gain since February 2010. The previous 12-month reading ending in March 2011 registered an increase of 1.2 percent. Still, the core inflation rate remains below the Federal Reserves preferred range of between 1.6 and 2.0 percent.

On a monthly basis, the CPI, the government’s main gauge for tracking US inflation, rose in line with most economists’ expectations. Consumer prices climbed 0.4 percent in April 2011 as compared to the 0.5 percent increase in March.

Energy was again the main stimulate, advancing 2.2 percent with prices at the pump up 3.3 percent. Food costs rose 0.4 percent. Other consumer price increases in April 2011 included new and used vehicles (up 0.7 and 1.2 percent), transportation (up 0.2 percent), medical care (up 0.3 percent), and airline fares. The cost to fly jumped 12.1 percent over the last 12 months.

Excluding the more volatile food and energy prices, the so-called core US inflation rate advanced 0.2 percent in April 2011. That was also inline with most economists’ forecasts. The core inflation rate rose 0.1 percent in March.

"There clearly has been some acceleration, even at the core level," Jim O’Sullivan, chief economist at MF Global Inc. in New York, who accurately forecast the overall April gain, said and was quoted on Bloomberg. "The Fed is happy to see core inflation move back up a bit, but I suspect they’d almost like to see it move a little slower. The numbers are still pretty tame."

Consumer prices on the 12-month level and between October 2010 and April 2011, as reported by the US Labor Department, are shown below:

April 2011 Consumer Prices – Gains (%)

Oct Nov Dec Jan Feb Mar Apr 12
Month
All items 0.2 0.1 0.5 0.4 0.5 0.5 0.4 3.2
  Food 0.1 0.2 0.1 0.5 0.6 0.8 0.4 3.2
    Food at home .0 0.3 0.1 0.7 0.8 1.1 0.5 3.9
    Food away from home 0.1 0.1 0.1 0.2 0.2 0.3 0.3 2.1
  Energy 2.6 0.2 4.6 2.1 3.4 3.5 2.2 19.0
    Energy commodities 4.4 0.8 7.5 4.0 4.8 5.5 3.1 32.7
      Gasoline (all types) 4.6 0.7 8.5 3.5 4.7 5.6 3.3 33.1
      Fuel oil 4.7 4.2 4.9 6.8 5.8 6.2 3.2 35.1
    Energy services 0.2 -0.7 0.5 -0.6 1.1 0.2 0.6 0.1
      Electricity 0.4 0.9 0.3 -0.5 0.4 0.7 0.2 0.6
      Utility (piped) gas service -0.4 -5.7 1.4 -1.2 3.4 -1.4 1.9 -1.5
  All items less food, energy .0 0.1 0.1 0.2 0.2 0.1 0.2 1.3
    Comm. less food, energy -0.2 -0.1 .0 0.2 0.2 0.1 0.4 0.7
      New vehicles -0.2 -0.4 .0 -0.1 1.0 0.7 0.7 2.4
      Used cars and trucks -0.9 -0.5 -0.1 -0.3 0.1 0.8 1.2 3.3
      Apparel -0.3 0.2 0.1 1.0 -0.9 -0.5 0.2 0.1
      Medical care 0.1 0.2 0.1 0.5 0.7 0.5 0.5 3.1
    Services less energy 0.1 0.2 0.1 0.1 0.2 0.2 0.1 1.6
      Shelter 0.1 0.1 0.1 0.1 0.1 0.1 0.1 1.0
      Transportation 0.3 0.5 0.2 0.6 0.5 0.5 0.2 3.6
      Medical care 0.2 0.1 0.3 -0.1 0.4 0.1 0.3 2.8

 

The Labor Department will release the next round of Consumer Price Index (CPI) statistics for May 2011 on June 15, 2011 at 8:30 AM Eastern Time. The CPI data is used as the core engine for the Inflation Calculator.

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